The Results Are In: You Are Now a Joint-Employer

In the restaurant industry, it is a well-known fact that franchising is an extremely profitable business model. As a National Restaurant News (NRN) commenter stated, “You can’t franchise failure – only success. If almost 100 years of franchising in the USA wasn’t good for our country, it wouldn’t be so well accepted” (NRN Comment Section). Unfortunately, according to the National Labor Relations Board (NLRB) and many within the U.S.’s labor force, franchising relationships are not being accepted as well as the industry believes.

For nearly three decades, the NLRB stood by its broad definition of what it means to be an “employer” by separating franchisors and franchisees depending on the parent company’s “direct or immediate” level of supervision – until now. This means that an employee that works for a franchisee-owned McDonald’s could now be employed by both the franchisee and McDonald’s Corp.

Those in favor for the redefinition believe that major companies will no longer be able to hide behind the veil of abusive corporate practices that hinder workers to organize and ultimately impede on franchisee operations.

In an Inc.com article, employment law specialist Michael J. Lotito stated, “The current method for determining joint employer status revolves around ‘direct control’ — who hires, fires, directs and evaluates the employees on a day-to-day basis.” If this changes, major corporations like McDonald’s will be held “liable in worker lawsuits, and potentially responsible in any collective bargaining activity.” It sounds nice, wholesome, and the “right thing to do,” but there’s more.

Additionally, the same company that is now liable for its current employees could also be considered a “joint employer,” for example the new janitorial agency they just hired. Since the company has direct control over the hiring and firing of the agency as a whole, the contracted janitorial staff is now essentially considered employees of the parent company. It’s a slippery slope to a downward spiral many restaurant operators and industry leaders are well aware of, but no one seems to be listening.

According to Forbes contributing writer, Tim Worstall, the NLRB’s decision “calls into question the entire validity of the franchise system. Imagine the upheaval in the fast-food industry if tens of thousands of restaurants accustomed to operating independently suddenly were forced to work hand in hand with franchisers on every employment-related decision.”

In a recent NRN article, Dawn Sweeney, President and CEO of the National Restaurant Association, further reiterated that the NLRB’s decision is a “dangerous path that dissolves the long-established ‘joint-employer standard’ that has helped create millions of restaurant jobs.” Additionally, the decision “will have dire consequences to franchisees, franchise employees and the economy as a whole.”

Unfortunately for McDonald’s, the hits keep coming. In December 2014, the NLRB designated McDonald’s as being a “joint employer” with its numerous franchisees, and was just recently denied the company’s attempt to appeal the ruling.

Loren joined Chain Store Guide July 2014 as a Market Research Editor. She graduated from the University of South Florida with a Bachelor of Arts in English for Technical Writing with a minor in Mathematics. Loren brings six years of restaurant industry experience to Chain Store Guide.